KXEN Buy Makes SAP a Force to Be Reckoned With in Predictive Analytics

13 September 2013

G00257996

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Summary

Buying KXEN will strengthen SAP in predictive analytics. KXEN will gain much-needed scale, but KXEN's customers should note that customer satisfaction with some releases of SAP's business intelligence products has been low.

Table of Contents

News Analysis

Event

On 10 September 2013, SAP announced that it plans to acquire KXEN, a provider of predictive analytics technology for line-of-business users and analysts. SAP expects the deal to be completed in 4Q13.

Analysis

Acquiring KXEN and its strength in predictive analytics will make SAP a real competitor in this market, one in which it has lagged behind. The deal will enhance SAP's ability to bring predictive analytics to business users, as KXEN's technology automates key modeling and analytical tasks. SAP's customers will benefit from the capabilities of InfiniteInsight, KXEN's flagship product, and Cloud Prediction, its cloud-based platform.

The acquisition is designed to complement SAP's existing advanced analytics. Although Securities and Exchange Commission law prevents SAP from making a full road map available until after the acquisition completes, it's not obvious to us how KXEN will complement SAP Predictive Analysis using R and SAP Hana. We question SAP's ability to go to market with two independent products in the predictive analytics space.

This deal indicates that SAP is willing to pursue an acquisition model to fill gaps in its business analytics portfolio — and it is likely to make further acquisitions. Before SAP acquired it, Business Objects used to buy vendors when it needed a capability, such as Infommersion (for its Xcelsius visual dashboard) and Crystal Decisions (for embedded and pixel-perfect reporting). But this created an unwieldy codebase. It appeared, until this announcement, that SAP had changed to a more organic development model that resulted in a more manageable codebase (with SAP Lumira, SAP Predictive Analysis and SAP BusinessObjects Design Studio).

We don't expect that SAP will promote KXEN to those on non-SAP architecture, such as Teradata, salesforce.com and Oracle. We believe that KXEN's cloud strategy will become central to SAP's predictive analytics solutions.

Recommendations

SAP customers:
Consider KXEN if you have been assessing other predictive analytics solutions.

SAP Predictive Analysis customers:
Watch closely, as we believe the planned acquisition makes the future of this product uncertain.

KXEN customers:
Be cautious given SAP's track record for customer satisfaction with some versions of its BI products.

Those selecting vendors:
Wait until SAP publishes its road map before considering it for predictive analytics. In 12 to 18 months, the combination of SAP and KXEN could make it a real contender.

Recommended Reading

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"Vendor Rating: KXEN"
— The company's focus on rapid development of predictive models makes it a compelling option for organizations requiring large numbers of models, or for those looking at complex issues influenced by large numbers of diverse data types.
By Gareth Herschel

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